As Canada Cans The Penny, Will The U.S. Follow?

In Canada, the penny is no more.

America’s northern neighbor officially stopped distributing pennies on Monday, February 4, in a move that the Canadian government believes could save $11 million a year.

Canadian pennies cost 1.6 cents to produce, yet have a value of just 1 cent, meaning it doesn’t take an econ major to see the inherent flaw in the system. The country will now adopt a “rounding” system where prices will be adjusted to the nearest nickel.

“Pennies take up too much space on our dressers at home,” Canadian Finance Minister Jim Flaherty said when the move was first announced in 2012. “They take up far too much time for small businesses trying to grow and create jobs.”

In the U.S., the government faces a similar quandary in terms of the cost of penny production vs. their actual value. As D. Wayne Johnson wrote in his Wall Street Journal editorial in January 2013, it already costs the U.S. more than a cent to produce a penny, and the coin has “less purchasing power today than the U.S. half-cent coin did when the government abolished it in 1857.”

According to Johnson, the U.S. could eliminate the penny by way of a Treasury proclamation making each $0.1 cent piece the equal in value to that of a nickel. This change would cause mini windfalls all over the nation,” Johnson admits, “but it would prevent the problem of scrapping all those loose pennies.”

And Johnson didn’t stop at the penny: instead, he advocated a more radical approach in which the penny, nickel and quarter are all eventually phased out of American currency, while the dime and 50-cent piece get to stay. He then proposes adding five-dollar and 10-dollar coins, noting, “coins outlast paper 20-to-one in circulation.”

While the extent of Johnson’s change-changing platform is unique, he’s far from the first proponent of U.S. penny elimination. Such campaigns are often met with resistance from lobbies and traditionalists though, as NPR points out.

What do you think: would you like to see the U.S. scrap the penny? How useful do you find pennies in your everyday life? Let us know in the comments below.